NSW Labor leader Luke Foley has ordered his party to donate to charity any money it was gifted by convicted murderer Ron Medich.
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It's believed party received more than $260,000 from a company part-owned by Medich, who on Monday was found guilty of ordering the execution-style killing of business rival Michael McGurk outside his home in September 2009.
In 2010, Labor announced it had frozen donations from Medich Property Group pending the outcome of court proceedings against the millionaire developer.
Then-NSW Labor general secretary Sam Dastyari said the funds would be donated to charity should Medich be convicted.
But a party spokeswoman on Tuesday told News Corp Australia the party did not intend to, noting the pledge was made almost a decade ago and that the money had already been spent.
NSW Special Minister of State Anthony Roberts accused Labor of breaking a "clear commitment" and called on Mr Foley to return the donations or resign.
"I've seen the ALP do some pretty remarkably bad things in my time but they never cease to amaze me, this is just disgraceful," he told reporters.
Soon after, Mr Foley intervened. He contacted NSW Labor's secretary to say he expects the donations to be paid to charity.
"The Labor party won't keep a murderer's money," he told Sydney's 2GB radio.
"The sum in question will be paid to charity."
While he usually keeps "well away" from dealing with donations and was "sympathetic" to the party's view, Mr Foley said it "didn't sit right" with him.
"I'm the Labor leader and the buck stops with me.
"Yes, they were spent years ago, but we will find the money to make this right."
The state opposition leader wouldn't confirm how much money was to be donated, saying that was up to party officials.
They would also decide which charity or charities will benefit, he said.
Earlier, federal deputy Labor leader Tanya Plibersek told reporters she wouldn't accept the money if it was up to her.
Mr Roberts acknowledged the Liberal Party had also received donations from Medich, worth about $3000, and that that money would also be given to charity.
Australian Associated Press